July 1, 2009

 

CBOT Soy Outlook on Wednesday: Up on fundamental strength, outside markets

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session with a firm undertone, buoyed by a strong fundamental base and supportive outside market influences.

 

CBOT soybean futures are seen opening 15 cents to 20 cents higher.

 

Old crop futures are expected to lead the gains, with tight stocks and strong demand continuing to have a bullish impact on prices, analysts said. New crop futures are seen higher as well, garnering strength from uncertain new crop potential, as the market can't afford to lose a bushel of yield with new crop end stocks expected to remain tight.

 

Outside market influences will aid the bullish tone, with a weaker U.S. dollar, higher crude oil and equities expected to attract some speculative buyers, analysts said.

 

Nevertheless, soybeans have enough fundamental support to keep prices underpinned, with bull spreads in soybeans and soymeal expected to extend to new highs again amid the limited availability of old crop supplies.

 

The July/August spread settled at a US$1.07 cent inverse Tuesday, and the July/November spread settled at a US$2.45 1/4 cent inverse. Traders said without the threat of deliveries on July soybeans and soymeal the spreads will widen, with the July/November spread targeting a US$3.00 inverse in attempt to ration demand, analysts said.

 

A market technician said the next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at Tuesday's low of US$9.43 1/2 a bushel.

 

DTN Meteorlogix said generally favorable weather conditions for developing corn and soybeans in the U.S. Midwest are expected to continue during the next seven to 10 days with no significant hot weather and with periodic shower activity.

 

In deliveries, July soyoil deliveries totaled 5,721 lots. Customer accounts at Man Professional Clearing issued 1,313 lots while the house account at ADM Investor Services issued 680 lots. Stoppers were scattered among various commission houses, with a customer account at Man Professional Clearing the primary stopper of 2,689 lots. The last trade date assigned was June 30.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, after a USDA report released overnight showed lower-than-expected soybean acreage. The benchmark January 2010 soybean contract settled RMB37 a metric tonne higher at RMB3,690/tonne.

 

Crude palm oil futures on Malaysia's derivative exchange ended higher Wednesday as investors covered their short positions, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR29 higher at MYR2,259 a metric tonne.